Avon has settled a longstanding bribery probe, but Wall Street is still full of questions about the company’s future.
Shares of the door-to-door cosmetics giant plunged to their lowest levels in 14 years after the New York firm reported a surprisingly wide quarterly loss while disclosing a $135 million settlement of federal allegations it bribed China officials — a clear violation of the Foreign Corrupt Practices Act.
The cash penalty was dwarfed by the $340 million that Avon spent on an internal bribery probe at its Chinese subsidiary dating back to 2008.
Still, Avon shares closed down 10.2 percent, at $13.72, after tumbling as low as $13.22 in intraday trades — their lowest point since March 2000.
Analysts got spooked by a wider-than-expected $168 million loss, with revenue dropping 11 percent, to $2.18 billion. Sales are plunging in markets across the globe, with the US market tumbling 20 percent.
The past three quarters have been Avon’s worst in 15 years, Javier Escalante, an analyst at Consumer Edge Research, noted on a Thursday conference call.
“To what extent can you tell us with intellectual honesty that this is going to get better?” Escalante asked.
“We’re certainly comfortable in our goals,” CEO Sheri McCoy said.